Bitcoin fluctuates under pressure as miners face capitulation; short positions total $250 million

The Technical Deadlock Holding Back the Market

Bitcoin remains stuck in a sideways trading pattern, rejecting advances above US$ 90,000. On Tuesday, the leading cryptocurrency retreated to US$ 87,700, reflecting the inability to break through the resistance that has been concentrating liquidity for weeks. Elevated volatility accompanies this pressure oscillating between buyers and sellers, keeping the asset directionless in the short term.

What draws attention is the disconnect between Bitcoin and precious metals. While gold and silver reach historic highs around US$ 4,500 per ounce — driven by risk aversion in an uncertain macroeconomic environment — Bitcoin does not follow this capital flow. This decoupling breaks a well-established historical pattern.

In the four-hour technical analysis, the asset repeatedly rejects the 200-period simple moving average (200SMA) and the exponential moving average (EMA), which act as dynamic resistance. As long as the price remains below these levels, the likelihood of testing lower levels remains high. Recovering this zone is considered essential to restore a more solid bullish structure.

Reduced Liquidity Amplifies Sharp Movements

The historic Christmas week significantly reduces order book depth. With many traders exiting positions to preserve accumulated profits, even smaller-volume operations can generate disproportionate volatility. QCP Capital warns that this environment tends to amplify both continuations and quick reversals in response to macroeconomic data.

Large institutional investors have opened combined short positions in Bitcoin, Ether, and Solana totaling approximately US$ 250 million. While this strategy reflects protection against further corrections rather than directional aggression, the impact intensifies precisely in conditions of scarce liquidity. Each attempt to rally encounters a significant increase in sell orders, creating an invisible ceiling that limits stronger movements.

Divergences Suggest Possible Reversal

Despite weakness in the immediate price, momentum indicators are beginning to paint a constructive picture. On the three-day chart, the Relative Strength Index (RSI) marks higher lows while the price traces lower lows — a classic bullish divergence setup. Similar patterns in previous cycles preceded significant rallies. Although divergences do not act as isolated triggers, they indicate weakening selling pressure.

The relationship between Bitcoin and gold (par BTC/XAU) also points to a relative loss of value of the cryptocurrency, suggesting possible technical compression. These contradictory signals keep traders alert to any external catalyst.

Miner Capitulation Changes the Fundamental Landscape

VanEck’s report reveals a critical situation in the mining sector. The hash rate dropped 4% — the most pronounced decline since mid-2024 — while Bitcoin retraced 9% this month. The 30-day realized volatility exceeded 45%, a level not recorded since April 2025. Less efficient operators are shutting down equipment to avoid operational losses, in a process that reduces medium-term structural selling pressure.

The geographic shift was abrupt: about 400,000 machines were decommissioned in Xinjiang province, removing approximately 1.3 GW of capacity in just 24 hours. These machines were relocated to artificial intelligence data centers, a sector offering higher margins than mining. Matthew Sigel and Patrick Bush estimate that up to 10% of the global hash rate could be permanently lost, concentrating activity among operators with access to cheaper energy.

Cost Compression and Historical Recovery

For the Bitmain S19 XP model, the breakeven electricity price fell from US$ 0.12 to US$ 0.077 per kWh in a year — a 36% compression. Operations that do not keep pace with this cost reduction face compromised economic viability.

Still, VanEck identifies at least 13 countries with some degree of state support for Bitcoin mining, seeking energy or monetary sovereignty. Historically, drops in the hash rate have been followed by positive returns in 65% of cases after 90 days. During contraction periods lasting 90 days, the six-month average return reached 72%, suggesting capitulations often mark the end of the selling cycle.

The market now awaits a trigger to consolidate the recovery: a consistent influx of buying capital above US$ 90,000, preferably with significant volume to reposition Bitcoin on its upward path.